Many experts believe that interest rates have peaked and may soon see a rate cut by the RBI (Reserve Bank of India). If that does happen, gilt funds are all set to appear attractive. Here's why: A change in interest rate has an inverse relationship with debt fund returns, especially those that invest in bonds with a medium to long duration. When the RBI hikes interest rates, the returns of such funds tend to decrease, and when interest rates fall, their returns typically increase.